China's industrial output growth adds to recovery hopes

The manufacturing sector has been one of the key drivers of China's growth in recent years

China's industrial production rose by more than expected in August, the latest sign that the world's second-largest economy may be on the mend.

Factory output climbed by 10.4% from a year earlier. Most analysts had forecast a figure closer to 9.9%.

Other data released on Tuesday showed that retail sales and fixed asset investment also rose during the month.

China has been trying to boost its economy after its growth rate slowed for two quarters in a row.

"The better-than-expected figures showed the recovering momentum of China's economy is stronger than market expectations," said Li Huiyong, an economist at Shenyin & Wanguo Securities in Shanghai.

"The three key drivers of China's economy, including exports, investment and consumption, have shown [an] obvious rebounding trend in August."

'Solid domestic demand'

Continued solid domestic demand growth provided an important cushion during the slowdown and remains key nowLouis Kuijs, RBS

The numbers come just days after China reported a strong growth in exports during August.

The export and manufacturing sectors have been key drivers of China's economic growth in recent years. But a slowdown in demand from key markets such as the US and Europe had hurt their growth recently.

However, conditions in those economies, especially the US, have been improving - providing a boost to these sectors.